Investors who are wary of the stock market are being urged to ensure they they maximise contributions towards their cash ISA.

TISA – the Tax Incentivised Savings Association – suggests that those investors who aren’t sure that now is the right time to invest in equities should take advantage of their cash ISA allowance because this can then be transferred into a stocks and shares ISA at a later date, without leaving the tax-free wrapper.

But with the end of the tax year looming on 5 April, TISA says investors need to act now if they have not yet used their 2008/09 ISA allowance, or risk losing the tax-free benefits.

Tony Vine-Lott, TISA's director general, says, ‘If the events of the past 18 months have told us anything, it's that it is essential to have a savings nest egg. ISAs are a fantastic savings vehicle, offering tax-free returns and, in the case of cash ISAs, it is easy to access money if there is an emergency.

‘As we approach the end of the tax year, investors should look out for the good deals on offer in terms of discounted management fees for stocks and shares ISAs. For those able to lock money away for a longer period, there are also bonus rates on offer for cash ISAs, although interest rate penalties are likely to apply if money is withdrawn before the end of the term.’

Many providers have deadlines for the receipt of applications at the end of March, and with 5 April falling on a Sunday, investors should act well before the deadline.

Further reading:

ISA planning in 2009
Financial planning with ISAs
Unusual ISA ideas